New mine will mean more marine pollution in Sulawesi

Down to Earth No 68  February 2006

Villagers and NGOs are trying to stop a British-registered company developing a gold mine which could drastically affect the livelihoods of fisherfolk living in Rinondoran Bay, North Sulawesi.

Protests in Jakarta by community representatives from North Sulawesi against gold mining and its impacts on the marine environment, livelihoods and human health: the words 'Newmont', 'Buyat Bay' and 'STD' quickly spring to mind. This time it's not the US mining giant that's involved, but a UK-registered company, Archipelago Resources. And, despite the strong evidence of food-chain pollution from Newmont's mining waste dumped in Buyat Bay, the company is determined to use the same 'submarine tailings disposal' (STD) method. Jakarta's energy and mineral resources minister appears to be equally determined to allow another mining disaster to unfold.

PT Meares Soputan Mining (MSM), 85% owned by Archipelago Resources, has already started construction at the minesite at Rinondoron on the northernmost tip of Sulawesi. The area is around 200 km from Newmont's Minahasa Raya mine. That mine dumped 2,000 tonnes of waste into Buyat Bay per day, and has been blamed for declining fish stocks and ill-health among villagers in the bay. Last year the government started criminal proceedings against the company for violating environmental law. The case continues, but a civil case, also brought by the environment ministry, is being settled out of court (see DTE 67). Newmont's mining operations ceased in 2001, while ore processing - and waste dumping - ended in 2004.

Now PT MSM is taking up where Newmont left off. It expects the mine to produce around 0.9 million ounces of gold over six years (160,000 oz/year), and during that time, it will dump an estimated 1.2 - 1.7 million tonnes of waste into the sea annually, or around 3,200 - 4,700 tonnes per day. This amounts to 6-8 million tonnes over the life of the mine. The waste is likely to contain cyanide compounds, arsenic and heavy metals - a similar toxic mix to that produced by Newmont. Yet Archipelago Resources claims that its waste will be much the same as the seabed sediment where the waste is supposed to end up.

The company also claims that its operations will comply with international standards. However, this is misleading. For example, the company's own data shows that the mine tailings will contain 23 micrograms/litre of dissolved copper, which is three times the new Marine Water Criteria for the ASEAN region. The tailings will also exceed the US National Oceanic and Atmospheric Administration (NOAA) guidelines for chromium and manganese.

Companies involved
PT MSM obtained its 741,125 hectare 'Toka Tindung' concession in 1986. An initial plan to mine at one location, called Talawaan, failed when the local government allocated the area to small-scale miners.

Archipelago Resources registered on the London's AIM stock exchange (see box, below) in September 2003. The company took over Toka Tindung from Australia's Aurora Gold in 2002. The same year, it acquired Aurora's interest in the Indo Muro Kencana gold mine in Central Kalimantan - although this mine, developed on indigenous Dayak land, had a long association with human rights abuses (see DTE 55). Archipelago's shares are owned by Australian business interests.

In August last year, Archipelago announced that an Indonesian subsidiary of Australia's Leighton Holdings, PT Leighton Contractor Indonesia had been awarded the mining contract for Toka Tindung. Archipelago has secured a loan from UK-based Rothschilds worth $35 million and is reported to be shipping a second-hand processing plant from South America for use at Toka Tindung. Indonesia mining advocacy network, JATAM, points out that the use of second-hand equipment should be a source of concern for the Indonesian government since its age and condition will influence the mine's impacts.

Thousands object
In late November, a delegation of villagers from Rinondoran Bay arrived in Jakarta to press the central government to stop the mine and save their livelihoods. They presented a petition opposing the mine, signed by 10,000 people and held a demonstration with prayers and songs which attracted much press interest. The groups presented their case to the National Commission on Human Rights, the House of Representatives, the Regional Representative Council and the Ministries of Energy & Mineral Resources, Environment, Fisheries and Tourism. They also visited the British Embassy.

The mine concession overlaps with the Tangkoko Dua Saudara Nature Reserve, which provides protection for 13 mammal species, 15 bird and 17 reptile species in this unique wildlife region. Just off the tip of Northern Sulawesi lies the better known Bunaken National Marine Park, a well-managed conservation zone which is home to extensive coral reefs, teeming with marine species. The Lembeh Strait, south-east of the provincial capital Manado, is also well known among the international diving community for its pristine waters and rich marine life.

Rinondoran Bay is a focus for the local fishing industry and around 60% of the coastal population are fisherfolk, or run small guesthouses as part of an eco-tourism scheme. Concern about the impact of mining on their livelihoods has prompted coastal villagers to oppose mining in their area since exploration started in the late 1990s.

JATAM calculates that the goldmine will generate Rp19 billion (almost US$2 million) in royalties for the North Sulawesi government, but that economic damage to local fisheries will be at least Rp 54 billion per year (more than US$5 million).

Nevertheless, there was little sympathy from director general of geology and mineral resources, Simon Sembiring, who merely told the visiting delegation of villagers not to be 'paranoid' about the tailings. He also asserted that Buyat Bay was not polluted, implying there was no need to worry about pollution from tailings.

EIA expired
The environment minister responded more sympathetically to the villagers' concerns by investigating the status of the company's environmental impact assessment (AMDAL/EIA). EIAs are required by law before mining operations can begin. Ministry officials found that MSM's EIA, done seven years ago, was well out of date (the EIA is invalid if operations do not start within 3 years). It was also invalid because the proposed output from the mine was now more than twice the original estimate. The ministry said the company must halt operations until a new EIA has been completed. The new study should also comply with current law, which requires that local people are consulted about developments in their area.

The environment ministry wrote to the mines and energy ministry, recommending that it issue an instruction to stop the company's operations pending the new EIA. However, at the time of writing, the mines and energy ministry had failed to do this. The directorate general of geology and mineral resources is reported to have issued a letter saying that no further changes to the EIA were needed.

The minister's failure to act has drawn heavy criticism from NGOs, who also want a nationwide ban on submarine tailings disposal. Archipelago says the waste will be dumped 3.5 km from the shore at a depth of 150 metres below the sea's surface and that it will settle at a depth of 800-1200 metres. The company argues that land-based tailings disposal is not suited to local soils and that costs would be higher. However, JATAM says that the complex oceanography, including extremely powerful currents, makes it highly likely that the toxic elements from the tailings will mix with surface waters.

On the ground, MSM is continuing to develop the minesite, despite these activities being illegal and despite opposition from thousands of local people. Members of the notoriously brutal 'mobile brigades' police are reportedly being paid to guard the construction work, a move that will ratchet up tension and create potential for violence and human rights abuses against the community.The company claims it has no reason to stop its activities.

In a letter to the Jakarta Post, DTE criticised Archipelago Resources for failing to act responsibly:

"More than 10,000 local people have signed a petition to stop the mine. They fear they will suffer the same fate as the Buyat community where Newmont dumped its mining waste. They want to decide their own future, not to be the objects of 'socialization' and 'community development projects' determined by the company. They want sustainable livelihoods, not the promise of five years of wealth from a gold mine followed by a legacy of irreparably damaged land and poisoned waters. They want to develop their fishing, agriculture and tourism potential."


Reporting requirements

AIM is the London Stock Exchange's Alternative Investment Market. Launched in 1995, it aims at providing small, growing companies with access to global funding.

AIM allows firms to float shares with even fewer regulations and safeguards to those that apply on the main stock exchange.

UK-based companies must produce financial reports but, as yet, there is no legal requirement for UK-based companies to demonstrate any social and environmental responsibility.

A draft Company Law Reform Bill, introduced into the UK parliament in November 2005, focuses mainly on financial responsibility.

Friends of the Earth England, Wales & Northern Ireland forced Britain's Chancellor of the Exchequer, Gordon Brown, to do a U-turn on plans to cancel the Operating and Financial Review (OFR) reporting requirement.

From April 2006, the OFR requires the top 1,300 companies to produce an annual statement on their prospects including in relation to social and environmental issues.

A coalition of NGOs, including Friends of the Earth, Amnesty International and Christian Aid are pushing the UK government to pass new legislation to enforce corporate responsibility. (see; FoE EWNI press releases 3/Nov/05, 11/Jan/06, 2/Feb/06)

(Source: Jatam website www.jatam.orgSharecast 12/Aug/2005; Jakarta Post 5,8&24/Dec/05; Tempo Interaktif 23/Dec/05; JATAM updates 15/Dec/05 & 12/Jan/06)